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When conducting business across borders, converting local currencies to USD (United States Dollar) to make payments for goods and services is a common practice in the African market. While this may seem like a go-to solution at first, it brings with it a lot of inherent risks and challenges for African businesses.
In this blog post, we will discuss why African businesses should consider paying in their local currency instead of USD when dealing with cross-border transactions.
The Challenges of Paying in USD for African Businesses
One of the most significant challenges of using USD for cross-border payments in Africa is the inherent exchange rate risk. As many African currencies are volatile, the value of the USD can fluctuate dramatically due to unpredictable fluctuations in currency exchange rates, impacting the final cost of goods and services purchased abroad. For African businesses, this volatility can result in unexpected expenses and financial instability, thus affecting business profit and overall success in the global marketplace.
Additionally, not all African businesses have easy access to USD, especially smaller enterprises. This can create hurdles in international trade and lead to missed business opportunities.
The Benefits of Paying in Local Currencies
When conducting transactions in your local currency, you have more control over your finances. You are shielded from currency exchange volatility and can better predict the financial impact of international transactions, making budgeting and financial planning more accurate and reliable.
By avoiding currency conversion fees and unfavorable exchange rates, businesses can significantly reduce the expenses associated with cross-border payments. Unlike dealing in USD, where exchange rate fluctuations can result in unexpected costs, paying in your local currency allows your business to save costs, ultimately increasing its profit.
By paying in local currency, African businesses can offer more competitive pricing to their international partners. This can open up new markets and foster long-term business relationships.
Speed of payments:
Settling your payments in your local currency is faster as you do not have to indulge in any currency exchange process that may include intermediaries and lead to delayed payments. You can make payments in your local currency directly and instantly.
How AZA Finance Can Help Your Business
AZA Finance is Africa’s leading cross-border payments provider, with over ten years of experience in the industry. We specialize in facilitating transparent, efficient, and secure transactions across 115+ markets through our robust API and intuitive web platform. AZA Finance provides access to over 25+ currencies, reducing reliance on USD and mitigating the risks associated with currency fluctuations. Our financial infrastructure makes transacting, exchanging, paying, and settling in all major African and G20 currencies easy for your business.
With AZA Finance, you can make payments and settlements in your local currency without converting to USD first. This helps your business mitigate risks, reduce costs, and gain a competitive edge in the global market.
Contact us here to learn more about how we can help your business.